Reproduced with permission from Tax Management Weekly State Tax Report, Volume: 2012 Issue: 23,
06/08/2012. Copyright 姝2012 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com
Tax Policy
Paul H. Frankel, partner in Morrison & Foerster LLP and chairman of the BNA Multistate
Tax Advisory Board, is a leading authority on state tax issues. Each year, he and his col-
leagues prepare this list of important issues in state taxation facing tax practitioners, with a
focus on judicial developments. As in past years, nexus continues to be a hotly debated con-
cept. Another hot topic this year was apportionment.
2012 Hot Topics in State Taxation: Nexus,
Apportionment Among Most Active Topics This Year
BYPAUL H. FRANKEL,CRAIG B. FIELDS,
AND BEE-SEON KEUM
The past year saw marked developments in state tax
law. Although participation by the United States
Supreme Court was still too limited, many impor-
tant developments occurred at the state level. Among
the most active topics were nexus and apportionment.
U.S. SUPREME COURT
Goodyear Tires, SA v. Brown
In Goodyear Tires, SA v. Brown, the U.S. Supreme
Court held that a foreign corporation is not subject to
general personal jurisdiction on causes of action not
arising out of or related to any contacts between it and
the forum state merely because other entities distribute
in the forum state products placed in the stream of com-
merce by the defendant.
1
The foreign subsidiaries of a
tire manufacturer were sued in North Carolina by the
parents of two boys from North Carolina who died in a
bus accident outside of Paris, France. In their com-
plaint, the parents alleged that defective tires manufac-
tured by the foreign subsidiaries caused the deaths. The
U.S. Supreme Court reversed the North Carolina
courts, concluding that the foreign subsidiaries’ con-
nections to North Carolina (i.e., allowing their products
to reach North Carolina) fell ‘‘far short of the continu-
ous and systematic general business contacts’’ neces-
sary for North Carolina to ‘‘entertain suit against them
on claims unrelated to anything that connects them to
the State.’’ This case, and J. McIntyre Machinery Ltd. v.
Nicastro (discussed below), could have significant im-
plications in the state tax world.
J. McIntyre Machinery Ltd. v. Nicastro
In J. McIntyre Machinery Ltd. v. Nicastro, the U.S.
Supreme Court held that a state cannot exercise, conso-
nant with due process under the U.S. Constitution, in
personam jurisdiction over a foreign manufacturer
solely because the manufacturer targets the United
States market for the sale of its product and the prod-
1
Goodyear Tires, SA v. Brown, 131 S. Ct. 2846 (2011).
Paul H. Frankel and Craig B. Fields are part-
ners with Morrison & Foerster in New York.
Bee-Seon Keum is an associate with the firm.
The authors can be reached at pfrankel@
mofo.com, cfields@mofo.com, and bkeum@
mofo.com.
Copyright 娀2012 Morrison & Foerster LLP.
Copyright 姝2012 TAX MANAGEMENT INC., a subsidiary of The Bureau of National Affairs, Inc. ISSN 1534-1550
Tax Management
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